Why do some states default on their debt more often than others? We argue that sovereign default is the outcome of a political struggle among different groups of citizens. It is more likely to happen if: (i) domestic debt-holders are relatively weak; (ii) the political costs of the financial...

Balassone, Franco, Momigliano and Monacelli examine the process of fiscal consolidation in Italy during the Nineties. They highlight its success in reversing a trend that could have led to public debt default, and in ensuring the early participation of Italy to monetary union. The authors argue...

We study the effects of fiscal policy on macroeconomic developments in Italy over the period 1982-2010 with a Structural Vector Autoregression (SVAR) model. We include public debt and impose the government budget constraint in the estimation. In contrast with previous research we also include...